Crude shortage puts state-run Eastern Refinery at risk of closure

The earliest crude oil supply is due in at least 10 days, authorities say

Bangladesh’s only state-owned oil refinery Eastern Refinery Limited (ERL) is facing a potential production halt amid the Middle East conflict, which has disrupted the supply of crude oil.

Meeting roughly one-fifth of the nation's fuel demand, the refinery has already slashed its daily processing capacity from 4,500 tonnes to 3,500 tonnes to stretch its dwindling reserves.

As of Thursday, only 20,000 tonnes of crude remain -- enough to sustain operations for less than a week.

Historically, the facility has only ever shut down for scheduled maintenance every three to five years.

This marks the first time in ERL’s history spanning nearly six decades that it faces an unscheduled closure due to a raw material shortage.

The crisis stems from the volatility in the Persian Gulf, particularly the near-blockade situation at the Strait of Hormuz.

A tanker, the MT Nordic Pollux, carrying 100,000 tonnes of Saudi crude, has been stranded at the outer anchorage of Ras Tanura port for a month, awaiting clearance to navigate the conflict zone.

While government officials remain optimistic that two tankers will reach Bangladesh by Apr 12 and Apr 18, ERL will likely run dry for several days before the earliest shipment arrives, according to energy division data.

Despite the looming refinery shutdown, the Ministry of Power, Energy, and Mineral Resources maintains there will be no nationwide fuel crisis this month.

“We are not solely dependant on Eastern Refinery,” said Monir Hossain Chowdhury, joint secretary of the energy division.

“While ERL provides a portion of our needs, we import 80 percent of our fuel in refined form from sources like Singapore, China, and India.”

Data from the Bangladesh Petroleum Corporation (BPC) shows that as of Wednesday, the country holds a 10-day reserve of diesel, an 8-day supply of octane, and a 9-day stock of petrol.

Jet fuel and furnace oil reserves are slightly higher, lasting 28 and 26 days, respectively.

While alternative shipments of refined oil arrived in Chattogram on Mar 26 and 31, the halt of ERL operations would cut off the domestic production of 12 types of fuel -- including petrol, diesel, and octane -- further straining the country’s energy security during the ongoing regional war.

An ERL official noted that the last major shipment of 100,000 tonnes of crude oil arrived on Feb 18.

That consignment is now nearly exhausted, with no further crude shipments arriving from the Middle East since then.

Attempts to reach ERL Managing Director Sharif Hasnat by phone for a statement were unsuccessful.